"Kitco" is a familiar name to many people who visit our world-famous, award-winning website www.kitco.com. With its compelling combination of an online precious metals store, live spot prices, expert market commentaries, up-to-the-minute news and usable market information, our website attracts nearly a million visits every day.
Kitco Metals Inc. is also one of the world's premier retailers of precious metals and a leading supplier of refining services, labware for mineral analysis and precision-crafted devices for high-technology manufacturing processes.

Two Palladium ETFs To Launch In South Africa Next Week

The corporate and investment banking division of Absa Bank Ltd., member of BarclaysBarclays, Thursday said it will list its palladium-backed ETF, NewPalladium, on the Johannesburg Stock Exchange on March 27.

The market has long been awaiting news on the pending start ever since demand for a similar Absa platinum ETF launched last year quickly drew strong investor interest. It became the world’s largest physically backed platinum ETF within months.

The announcement about the coming Absa palladium ETF launch comes just one day after news that Standard Bank of South Africa is preparing to list the country’s first palladium-backed ETF on the Johannesburg Stock Exchange on Monday.

NewPalladium will join other Absa commodity ETFs that include NewGold, the largest ETF in Africa, and NewPlat. An investment in NewPalladium, issued by NewGold Issuer Ltd., will provide investors with the opportunity to obtain exposure to the South African rand performance of bullion.

“Our product will have full liquidity from Day 1,” Vladimir Nedeljkovic, head of exchange-traded products at the corporate and investment banking division of Absa, told Kitco News. “We will be able to satisfy any investor need from Day 1 because we already have supply of South African palladium that we managed to source….”

Standard plans to also launch gold and platinum ETFs in the near future. The company’s palladium ETF is called AfricaPalladium. Plans call for the AfricaGold and AfricaPlatinum ETFs to be listed in early April.

Absa’s platinum ETF, started last April, is approaching holdings of 1 million ounces, Nedeljkovic said. Holdings have continued to rise since the start of the year, he added.

It’s hard to forecast just how much investment interest there will be in the new palladium ETF, Nedeljkovic said, but “we think there is going to be good demand among institutions for this product.”

Demand for the current Absa platinum ETF rose so dramatically last year in part because the country is the world’s largest producer of the metal, therefore South African institutional investors were already familiar with the commodity, Nedeljkovic said. South Africa provides some three-quarters of the world’s mined platinum supply. It is generally regarded the second-largest palladium producer behind Russia.

“Most of our institutional investors have had quite large exposure to the mining sector and to the platinum miners. So they know quite a lot about the sector,” Nedeljkovic said.

Further, he said, many in the country might look to platinum as a “country hedge” type of investment. For instance, if there are any major crises in the country, such as the current strike in the platinum-mining sector, this should in theory underpin the platinum price due to less global supplies.

“So having a platinum investment is a good defensive investment in a South African context,” he said.

On top of this, many analysts around the world already look for improvement in platinum prices. Bank of AmericaBank of America Merrill Lynch on Thursday forecast an average 2014 price of $1,554 an ounce, which is above the Thursday pit settlement of $1,434.80 for the most-active April contract on the New York Mercantile Exchange. CommerzbankCommerzbank said on Wednesday that it sees platinum rising to a fourth-quarter average of $1,600.

BAML looks for palladium to average $792 this year; Nymex June palladium settled at $771.65. Commerzbank forecast a fourth-quarter average of $825.

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.